News & Views

Two Current Trends in Dispute Resolution

25 October 2018

Authors: Helen Lehto, Antti Järvinen and Anna-Maria Tamminen

The landscape of dispute resolution is forever changing and adapting to new developments. In the following, we address two current trends in this field.

First of all, we are seeing an increase in the tendency of settling cases in the early stages of a dispute. Even in these situations, companies understand and appreciate that outside counsel can add value in several ways. Hiring outside counsel – who can evaluate the case and either negotiate on behalf of the company or otherwise assist the client in the background on the basis of that evaluation – can significantly increase the chances of reaching a favourable settlement.

Sometimes, it may also be in the best interests of a company to suggest that the dispute be resolved in mediation, where a neutral mediator assists the parties in reaching a settlement. Also in that instance, an outside counsel can add substantial value by assisting parties in finding the right mediator, helping a party adequately prepare for mediation, and by assisting the party in providing information and suggestions to the mediator which assist her or him in negotiating a settlement.

The second trend concerns large cases that are not settled quickly, but instead proceed to full-fledged arbitration or litigation. Cases like these place a considerable strain on the companies involved in the dispute. In addition to the practical challenges associated with a large-scale dispute, they also tend to be very costly. As such, companies sometimes shy away from commencing arbitrations or litigations even when they have a fairly strong case, simply because of the financial risk involved in potentially having to pay all legal and other costs associated with the dispute, should they ultimately lose. This is all the more so in areas where the law is unclear or there is not a lot of precedent on the basis of which to assess risk.

An increasingly common way of solving the risks associated with large disputes is to solicit the help of an outside funder. Typically, a litigation funder will evaluate the case in question and may then agree to finance the legal costs associated with it in exchange for a compensation (such as a percentage of the damages awarded based on contingency) in case the dispute is ultimately won. As such, obtaining outside funding can significantly offset the financial risk which a dispute places on a company.

Third party funding is commonplace internationally for disputes such as arbitrations and insolvency-related cases. It has also recently been successfully used in the Nordic countries. As such, this is a viable option to consider for companies who are contemplating whether or not to file a claim against their counterparty.

Should your company wish to discuss negotiating a settlement, arranging a mediation, or obtaining third party funding for your dispute, Hannes Snellman's dispute resolution team is here to assist you.